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Audit Report: OAS-RA-10-18

September 29, 2010

Management Controls over the Department of Energy's American Recovery and Reinvestment Act – Michigan State Energy Program

The Department of Energy's (Department) Office of Energy Efficiency and Renewable Energy (EERE) provides grants to states, territories and the District of Columbia (states) to support their energy priorities through the State Energy Program (SEP). Traditionally, SEP received $40 to $50 million in annual appropriations. The American Recovery and Reinvestment Act of 2009 (Recovery Act) expanded the SEP by authorizing an additional $3.1 billion to states using the existing distribution formula. EERE awarded the grants after reviewing state plans summarizing activities for achieving SEP Recovery Act objectives, including preserving/creating jobs; saving energy; increasing renewable energy sources; and, reducing greenhouse gas emissions. States are encouraged to use these funds not only to support current energy projects but also to aid sustainable programs that will provide lasting benefits. EERE program guidance emphasizes that states are responsible for administering the SEP within each state, and requires each state to implement sound internal controls over the use of Recovery Act funds.